HMRC investigations - what about the VAT

HMRC investigations - what about the VAT

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Client has been caught misdeclaring takings (a pub) for a number of years and HMRC have completed their enquiries, resulting in massive tax and NI liabilities the client has no grounds to dispute and cannot pay.
However throughout the process the issue of underdeclared output VAT has never been addressed. Not a word from the Customs side of the organisation, no mention of VAT due (and how it would be collected) from the Revenue officer dealing with the case
HMRC want a 'negotiated' settlement of the tax and NI but it's as though the VAT shorfall belonged to another country.
What happened to joined up tax collection - I thought it was now HM Revenue AND Customs?
Clearly the client - even if they had the funds - can not deal with the 'HMR' side of things while there is a VAT sword of Damaclese hanging silently over them. This is not the first time I've seen this lop- sided approach - is it normal?
Gerard Somers

Replies (7)

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By AnonymousUser
21st Aug 2007 00:36

re 3 year rule
my understanding was that they could go back 20 years in cases of fraud?

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By clive griffiths
20th Aug 2007 12:29

Three Year Rule?
Perhaps Customs & Excise have been caught by the three year rule? I assume of course that this business has been VAT registered for years. That said, the sharing of information between Revenue & Customs Officers is still very poor indeed in our area of the country. Will they never grow up?

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the sea otter
By memyself-eye
20th Aug 2007 17:11

not the three year rule
Customs did inspect (some of) the records of this pub before the Revenue opened their enquiry, but failed to spot the declared takings were nothing like the till rolls!
Maybe they are so busy with carousel fraud that £50k under declaration is too small!

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the sea otter
By memyself-eye
22nd Aug 2007 14:31

ML report - after the event....
Martin
Yes the client has put his hands up to the undeclared takings (claims his eyesight was deteriorating and he misread the till rolls!)
It's not that he is trying to hide the VAT underdeclaration (he can't repay it anyway) I know there will be one, he does, but the Revenue haven't mentioned it - not even: "I need to notify our customs 'colleagues' about any potential VAT arrears "
It's like a bank chasing a customer for overdraft repayment and ignoring a defaulting loan account.....
I haven't made a ML report as this came about after the investigation started and I see no point in reporting something the authorities already know about?

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By martinfoley07
22nd Aug 2007 16:54

I'm not an expert.....
.......on the topic, Gerard, but am pretty certain you need to make that ML report.

It is legally totally irrelevant whether "the authorities" know about it or not - stupid though that be. The law is an [***], which unfortunately is hardly a revelation.

Even were the client's mistake wholly innocent originally, he is now knowingly taking no action to correct it, and is self-evidently gaining financially from it.

I think that makes a cast-iron need for a report, albeit happy to be told otherwise by any experts out there.

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By martinfoley07
21st Aug 2007 19:21

MLR anyone?
Gerard
Direct answer : yes, it is normal at present. Lots of folk will rue the day when it becomes abnormal.
Indirect observation:
Is it the case that your client has agreed he has under-declared sales?
Is it the case that your client has declined to disclose underpaid VAT and make the payment?
In which case, do you not have a ML reporting problem?

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David Winch
By David Winch
02nd Sep 2007 21:29

I agree with Martin

Gerard

I agree with Martin that you should make an ML report.

David
http://www.MLROsupport.co.uk

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